Impact of Government budget on conveyancing market
Whenever there are Government budgetary announcements there is, naturally, a fallout on the housing market, the consequences of which are borne by house buyers and sellers alike, and those of us working in the conveyancing market.
And it’s been a dramatic few months for such budget announcements, with significant affects now on the property market.
Here, we take a look at the recent changes and announcements, of the Autumn Statement and implications of what may lay ahead in terms of issues and impacts affecting conveyancers and the property market for 2023.
Truss’s short-lived premiership and economic disruption
Liz Truss’ premiership, although short-lived, brought seismic changes and disruption to the conveyancing and property market.
The Government introduced substantial stamp duty land tax (SDLT) cuts, described as a “crowd-pleasing move” by the Chancellor at the time, Kwasi Kwarteng, when he set the mini budget, aiming to help approximately 200,000 homebuyers.
Seen by many as help for the property market, to boost activity and help homebuyers, particularly first-time buyers, the fact that there was no time limit to the SDLT cuts was lauded.
However, the mini budget also created a state of extreme economic uncertainly that caused markets to plummet and fuelled rises in mortgage interest rates.
Stamp duty cut reversal from March 2025
While no limit on the stamp duty cut may have gone some way to offset interest rate rises for house buyers, the most recent budgetary announcements from Jeremy Hunt brought the reversal of the SDLT cuts from 31st March 2025.
SDLT cut reversal creates ‘stamp duty holiday round 2’
The stamp duty cut is now seen as a long stamp duty holiday rather than a permanent change. And, as with previous stamp duty holidays, any temporary easing that sees house buyers saving money creates an incentive to buy.
Remember the conveyancing rush we experienced during the stamp duty holiday in 2020-21?
It’s not hard to see why anyone looking to buy a house may want to take advantage of the substantial savings. The stamp duty cut means a first-time buyer’s nil-band rate increases from £300,000 to £425,000, and a home mover’s nil-rate band increases from £125,000 to £250,000. The saving for a homebuyer can be up to £6,250
With the Office for Budget Reporting anticipating housing activity to slow over the next two years as the UK enters a recession, there’s no doubt that the stamp duty holiday will go some way to spurring the market on.
2023 set to be busy for conveyancers
With the deadline of the stamp duty holiday in sight for early 2025, we predict that next year is potentially going to be the busiest time for conveyancers as homebuyers look to take advantage of the holiday.
The deadline to the SDLT cuts is also likely to drive up prices, particularly in the run up to the end date, which may well mitigate activity in 2024. For this reason, 2023 is set to be the busiest year, even with the threat of recession looming.
House prices might be lowering, but…
Sources, including the house price index from the ONS show house prices are currently the lowest they have been in two years – as high interest rates are dissuading many people from buying. And some economists predict so much as a 10 or even 20 per cent fall in prices by next year.
But, while this may seem positive, particularly for first-time buyers getting on the property ladder, the fall in house prices only takes us back to pre-pandemic house-price levels, where the average house price was 65 times higher than in 1970 but wages are still only 36 times higher.
The unlikelihood of these falls in house prices greatly fuelling the market means, potentially, buyers will be particularly incentivised by the SDLT holiday.
Steadying fixed rate deals may prompt remortgage transactions
Of those homeowners whose current mortgage deals are coming to an end within the next two years, over half (55 per cent) are on two-year fixed rate deals and 39 per cent are on five-year fixed rate deals, according to research from The Mortgage Lender, owned by Shawbrook Bank.
While the term may be long enough for borrowers to sit tight on their current deals, once those deals end, they may likely seek a further deal for the reassurance that fixed-term deals bring, particularly as the cost of those deals show signs of slowing this month.
The average cost of two- and five-year fixed rate deals has fallen this December to 5.84% and 5.67% (2024 updated link) respectively, compared to highs of 6.65% and 6.51% last month.
The pressure, for homeowners, to make finances stretch as far as possible will undoubtedly cause an influx of remortgage transactions securing reasonably priced fixed deals conveyancers may want to prepare for.
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Alternatively, get in touch on 0800 524 4235 to speak to us directly about how we can help you with faster conveyancing, or email us at info@prosperityinsurance.co.uk.
